Parliament polarised by the benefits of a deep-red Budget

By Peter Wilson*

Analysis - A benefit-boosting Budget with a narrow focus written by a majority Labour government has shown up the differences between political parties.

"There's nothing for people who work to earn money." ACT leader David Seymour's comment captured centre-right reaction to the budget and lit up the gap between Labour and opposition parties.

It's the first Budget written by a majority government since MMP was introduced. Finance Minister Grant Robertson didn't have to bargain with any minor parties over their demands.

The result was a deep-red Budget, one that would never have been written by National.

It puts $3.3 billion into what Robertson described as the biggest benefit boost in a generation. All main benefits for working age people are being increased by between $32 and $55 a week. They start to kick in from July 1 and will be fully implemented by April next year.

National's leader Judith Collins said the focus was unusually narrow.

There's money for a raft of other causes, including Māori housing, health, education and Pharmac. All the details are on RNZ's website under What You Need to Know.

This budget is likely to be remembered only for what Robertson said was "righting a wrong" - repairing the damage caused by National's 1991 Mother of all Budgets, written by the then finance minister Ruth Richardson, which slashed benefits.

Stuff reported Richardson's reaction - she called it "a cheap shot". Jim Bolger, prime minister at the time, was dismissive and said he had come into government with a far worse fiscal outlook.

"I heard that tortured comparison being made by Grant Robertson," Bolger said. "I was disappointed in him. I thought he was better than that."

At the core of opposition reaction was what Collins called a lack of ambition. "It has no plans for the future," she said. "I think people who work for a living, pay their own bills, who work in some cases two or three part-time jobs, I think they missed out hugely."

Her party's economic development spokesperson, Michael Woodhouse, said the real disappointment was the lack of job creation that would lift people out of poverty. "The really important thing is not to put the ambulance at the bottom of the cliff but to prevent people falling off the cliff in the first place."

Robertson said the increases would restore dignity and hope for the lowest income New Zealanders. The government was putting right the damage caused 30 years ago.

Prime Minister Jacinda Ardern highlighted the impact the budget would have on poor families. "Today we close a chapter on our past and take a big step towards our goal of making Aotearoa New Zealand the best place in the world to be a child," she said.

National didn't dispute the need for benefit increases. Collins said the cost of living had gone up under the current government, particularly for housing, and that meant beneficiaries needed more. "Our focus would have been on building jobs and getting them into work."

The business sector lost out except for getting help for digital training. "Businesses were not thrown a bone," Stuff said.

BusinessNZ's chief executive Kirk Hope didn't take it badly, telling RNZ the government had put in a lot of money to help businesses during the pandemic.

He said he didn't think there had been enough signalling about the future growth path.

Seymour took issue with Treasury forecasts released with the budget. It projects economic growth to reach 4.4 percent in 2023.

"How can that possibly be the case with the government's anti-growth, anti-business agenda?" he asked. "We're heading straight for an iceberg with Grant Robertson at the helm of the ship."

An interesting aspect of the budget was Robertson's announcement that the government had made the first move to create an unemployment insurance scheme. It hasn't been funded in this budget but a group with representatives from business, unions and the government will be working on a design.

The idea is that it would pay around 80 percent of a person's wage, for a time, if they lost their job.

Robertson told Morning Report a lot of detail had to be worked through and he expected consultation would start by the end of the year. The scheme was common around the world and was supported by BusinessNZ and the CTU, he said.

Other political events this week that must be noted were:

Judith Collins' week began badly. A Newshub Reid Research poll saw her preferred prime minister rating crash to 5.6 percent, down 12.8 points. National was up slightly to 27 percent while Labour, on 52.7 per cent, maintained its huge lead.

The result drew media attention to Collins' strategy of attacking the government over what she calls "separatism by stealth", and she didn't get a good press.

The Herald's Claire Trevett said it could be summed up as: "Desperate times, desperate measures, belly flop."

Stuff headlined an editorial "Collins' failed experiment" and said National's leader faced a predicament. "Beating up racial divisions may be the last refuge of a political scoundrel, but what happens when even that doesn't work?"

Newshub's Tova O'Brien was the harshest. "I'm sorry Judith Collins, but on these numbers it's time to go," she said. "Make no mistake, Collins is a caretaker leader."

Collins took it on the chin, as she does, saying she wasn't going anywhere and was "enjoying every minute" of being party leader. People were focused on things that mattered to them, and politics wasn't one of them.

"It's certainly nothing different from any other opposition leader who is a few months out from an election," she said.

At a special caucus meeting - not called because of the poll - her MPs declared strong support for her and said she was asking legitimate questions about the government's intentions.

The government revealed its thoughts on immigration reform, short on detail but setting out its intentions.

Stuff's Luke Malpass put it this way: "It's only sort-of official and has been couched in vague language but the government clearly thinks that there was too much migration prior to Covid, and that even when the borders open up it should be significantly slowed."

Economic Development Minister Stuart Nash, standing in for Immigration Minister Kris Faafoi, told an audience of business leader that the country must move away from its reliance on a low-skilled migrant labour force, instead targeting high-skilled workers and wealthy investors.

People coming in on temporary work visas made up 5 percent of the Labour force - the highest share in the OECD. Temporary visas should only be for what were considered genuine skill shortages.

Nash described his speech as "a scene-setter" and some members of his audience weren't impressed with what they were seeing, or not seeing.

Infometrics senior economist Brad Olsen said: "I came away from this speech just feeling simply confused, unsure of what this speech was about… I think it will probably have prompted a lot more questions than answers."

Simon Wallace from the New Zealand Aged Care Association, which represents rest homes, said about 55 percent of nurses in the sector were on some sort of visa.

The sector was short of between 300 to 500 nurses despite campaigns to employ New Zealanders, and depended on overseas workers particularly from the Philippines and India. "It is really important we have that pipeline continued."

Prime Minister Jacinda Ardern told Morning Report the current situation was untenable and her government was simply signalling to businesses its long-term intentions.

She said reliance on a temporary workforce had doubled in the last 10 years to 200,000. "That has an impact for migrant workers. It means they may come to New Zealand, working in low-paid jobs, struggling to find decent housing and at the same time in the New Zealand economy we see it suppressing wages."

Parliament passed the bill that doubles sick leave from five to 10 days. The vote was 75-33 with Labour and the Greens supporting it while National and ACT opposed it. Doubling sick leave was one of Labour's 2020 election promises.

*Peter Wilson is a life member of Parliament's press gallery, 22 years as NZPA's political editor and seven as parliamentary bureau chief for NZ Newswire.